On May 21, 2015 the Stamford Superior Court issued a decision favorable to foreclosing lenders when only one of the record owners of the property signs the mortgage [HSBC Bank USA, National Association, as Trustee v. D’Agostino, FST CV-09-6002754-S].

While Deutsche Bank National Trust Company, Trustee v. Perez, 146 Conn. App. 833 (2013), held that “the record did not support a finding by clear, substantial and convincing evidence that the missing signatory participated in the mortgagor’s efforts to obtain the loan or execute the mortgage and therefore the court lacked the authority to reform the mortgage by adding her signature, (emphasis added)” the court in D’Agostino found that the plaintiff bank had recourse to foreclose against the omitted mortgagor under a theory of ratification and unjust enrichment.

Ratification, unlike reformation, is defined as “the affirmance by a person of a prior act which did not bind him but which was done or professedly done on his account.” Ratification requires “acceptance of the results of the act with an intent to ratify, and with full knowledge of all the material circumstances.” In D’Agostino, the court found that the omitted mortgagor ratified the mortgage because he had “knowledge of all of the circumstances which attended the mortgage loan transaction and intended to, did and still does accept the benefits of the transaction.”

In order for the plaintiff to obtain a recourse under the ratification theory, the court further found that the equitable cause of action of unjust enrichment was satisfied, and imposed a constructive trust as the vehicle to allow a judgment of foreclosure to be entered against the omitted mortgagor. A constructive trust arises “where a person who holds title to property is subject to an equitable duty to convey it to another on the ground that he would be unjustly enriched if he were permitted to retain it.” The D’Agostino case, although only a trial court decision, is encouraging for foreclosing lenders in the wake of the Perez decision.

Editor’s Note: The author’s firm represented the plaintiff in the D’Agostino case, which is summarized here.